Cigna deal gets antitrust nod, positive sign for CVS/Aetna

On September 5, The Wall Street Journal reported the DOJ was close to approving the Cigna-Express Scripts deal as well as CVS Health's $69 billion merger with the insurer Aetna, though that deal might require the divestiture of certain businesses related to Medicare drug coverage before it can go through. Express Scripts also owns specialty pharmacies that distribute pricey drugs.

The administration of U.S. President Donald Trump has said it is looking at how so-called industry middlemen and pharmacies such as Express Scripts and CVS impact drug costs for U.S. consumers.

"Both companies argue that the merger will benefit consumers by allowing Cigna and Express Scripts to better manage their customers' health by sharing information about both their medical and drug expenses".

"We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company", said David Cordani, Cigna's chief executive officer.

Cigna is a health insurance provider. The majority of the cost savings that result from the tie-up will flow to customers and not shareholders, Cordani has said. These were Aetna's thought to develop smaller USA properly being insurer Humana Inc (HUM.N) for $37 billion, and a deliberate $54 billion combination of insurers Anthem Inc (ANTM.N) and Cigna.

Antitrust experts have described the current deals as vertical combinations that present fewer issues than the failed insurer mergers.

Approval by the Justice Department smooths the way for the deal to wrap up by the end of the year, the companies said Monday in a joint statement. Federal antitrust enforcers have not successfully blocked a vertical merger in decades, and a federal judge in June cleared the vertical deal between Time Warner and AT&T after the Justice Department challenged it, which boded well for Cigna and Express Scripts' chances. Cigna was up 1.4 percent to $197.84. Express Scripts shares surged 4% in Monday afternoon trade, and Cigna shares rose almost 2%, compared with a 0.5% slump in the S&P 500 and a 0.3% decline in the Dow Jones Industrial Average.

Cigna previously attempted to merge with rival insurer Anthem, but the Justice Department challenged the $54 billion deal for threatening to harm competition for the administrative services business of large employers.

Cigna and Express Scripts said in a press release that they have received approval from 16 state insurance departments and are working with regulators in the other states to get the necessary approval.

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